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US accuses India of offering export subsidies against global trade rules

After the Indian government announced export incentives package under the latest foreign trade policy (FTP), the US, a major importer has accused India of providing incentives against the global trade rules. India, on its part has defended itself saying that it has three more years to remove all subsidies, while a number of schemes in the textile sector have already been removed.

Criticising the new sops for the textiles sector at a recent meeting of the WTO’s committee on safeguards and countervailing measures in Geneva, the US representative said providing new incentives to the sector is a step backwards as India is supposed to remove all textile export subsidies this year. However, both the countries feel that their differences could be amicably sorted out through bilateral meetings.

The five-year FTP announced last month came up with a new incentive scheme for goods exports — the Merchandise Export Incentive Scheme — under which most textiles and garments sectors have been entitled to sops worth 2 per cent of their exports, which is lower than the 3 per cent or higher sops that the sector received under the older schemes.

According to WTO rules, India has become export competitive in the textile sector as it has already accounted for more than 3.25 per cent of share in world trade for two consecutive years and needs to phase out export subsidies to the sector in eight years. Whereas, the US says that India became competitive in 2007 and should thus remove all subsidies in 2015.

 

www.wto.org

 
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